Junk debt buyers...please take time to read, will help you

OK, I am going to try to clear up some myths about the junk-debt buyers, aka bottom feeders that I have seen in some threads. (The term in the industry is debt acquisition.)This is kind of long, but I think this will help quite a few people. Feel free to repost and pass on.

I am going to explain some stuff, then do a brief explanation paragraph. You'll see what I mean.

I spent the last two years working for a bottom feeder. I am sorry, but I cannot disclose the name of the firm. I am not posting here under a name that they wouldn't know. Trust me when I say that the firm I used to work for, and other firms like them monitor popular forums and websites (like this one) daily. These junk-debt buyers all do business buying and selling with one another, so they do share the information. I don't care that they know that I am posting here, but I do have some friends that still work there, and I don't want any potential retaliation to come to them because of me. I will say that the firm I worked for is one of the top 40 debt acquisition firms n the country. I have only seen the name mentioned on this website one time. In their defense (although I don't owe them any favors) they are really one of the more upstanding firms out there, and try to do business honestly.

Here is how the process works. Let's say that ZZZ Bank has 35,000 Visa cards that were defaulted. They were unable to collect with in house collections, and charged off the debt. The average balance of each card is about 2K. That's a lot of money to lose, folks. ZZZ Bank will agree that something is better than nothing. They gather these accounts up into a portfolio, and put it on the market to the highest bidder. For now, let's just say three are bidding. JunkDebt A, Junkdebt B, and Junkdebt C. Let's say that bidding starts out at 5 cents on the dollar. The junk debt firms have limited info to work with on the portfolios they have. It's kind of like a storage unit auction. You know there are household goods and clothes, but until you bid and win, you won't know exactly what you got. The junkdebt firms are told the number of accounts, the average balance, the average charge off date, and how many have phone numbers. The junkdebt firms have to decide if they are going to lose money on the package, or if it is collectable and profitable. Skip forward...Junkdebt A wins the bid at 8 cents on the dollar, and now gets the portfolio. The manager of ZZZ Bank signs a bill of sale and Junk Debt A is now the first party owner of the debt, and has all rights that ZZZ Bank once had. In essence, Junk Debt A is now the original creditor.

>>>People often say, "That's not fair! I didn't agree to that!" Whether or not you agree doesn't matter. Acquisitions take place with companies all of the time. It's the same thing as AT&T buying Southwestern Bell. You have a phone with SWB. Are you going to refuse to pay AT&T because you didn't open the account with them? Well, you could, but you wouldn't have a phone for long. >>>That's a lot of money to come up with for that portfolio. Most people haven't ever heard of these junk-debt buyers before. How in the world are they coming up with all of this money? Investors. They peddle themselves around, and get people to invest in the company. I'm going to digress a quick second to collector behavior. I am not condoning illegal or bad practices on a collector's behalf, but I would like you to see what kind of conditions collectors work under. Let's stick with the theme of "It rolls downhill." OK, so Mr. Investor wants a return. He is going to be mad if he loses money, and won't be back next year. Junk-debt CEOS don't like that. They set up aggressive portfolio tracking, goal setting, quotas, financial planning, etc. This gets passed down to the senior managers and directors, who now have to produce results from their subordinates. Senior managers pound team-leaders into the ground with hours of training, and force them to work 50 hour weeks to make sure their teams all hit quota. The team leader has to answer to the senior managers if his team, as a whole or each individual, doesn't hit their personal goal. Personal goals add to up team quota and that equals the floor goal. The team leader is on each of their collectors to get the money. The collectors often work over 40 hours, and normally have their calls monitored and recorded by management. They have QA forms they have to meet 100% on. They have training on fdcpa. They constantly have this quota looming over them. Quite usually, it is very high. Collectors, by and large, do not live by salary alone, so they depend on their bonus checks. So, starting from the beginning of the month, all they see is the end of the month, and how many dollars away from their goal they are. If the collector is not at quota...you will hear it in their voice.

OKAYYY, so back to JunkDebt A, being the proud owner of this new portfolio. Immediately, they cut off about of the third of the accounts in the portfolio. and sell them. WHAT? Yes. Things can get tricky there. I'll get to that in the next paragraph. In the industry, since they bought from the original creditor, the purchased portfolio is called "firsts."
They take the accounts they kept, and send out accounts with bad information to skip tracing services. In the meantime, they are dividing up the accounts they have in house among their collectors. Each collector will get a certain amount of accounts, and then a large amount of accounts will go into a pool, which is generally used for auto-dialer time. Then, collections begin.

>>> I have seen a lot of posts where it has been said that first party owners do not have to follow FDCPA. I disagree with this, for the most part. Keep in mind that junk debt buyers are NOT, I repeat, NOT, a third party agency. They are very much first party. The FDCPA is kind of an implied law. If someone is being harassed, a judge is going to use the FDCPA for reference. Junk debt buyers MUST follow FDCPA! Period, end of story. They will jump off into the gray areas when they can, but at the end of the day, the law applies to them. I cannot tell you how many times I was beat down with FDCPA training. I can quote it in my sleep. Junk debt buyers TRAIN their collectors extensively. They are terrified of lawsuits due to FDCPA violations. I have seen companies settle out of court for four times the amount of the debt, just to avoid going to trial. These people are very money-minded, and lawsuits scare them.

OK, so what about this JunkDebt A selling off debt they bought? What's THAT all about? Well, money, in most cases, and exasperation in others. When a debt is sold from JunkDebt A to JunkDebt B, it becomes "seconds." Each time it is sold, it will sell for less on the dollar, naturally. It is really hard to get "firsts" in the market unless your firm has a LOT of money, so most firms don't have a lot of in-stat accounts. As I said, they sell off a slice of whatever new portfolios they buy immediately. Also, they will sell debt that they have tried to collect on, but failed.

>>>So, what does this mean to a debtor? Well, it can be a total nightmare for you. For starters, you can have multiple listings on your credit report, which can be very confusing. The main thing is that a lot of these agencies do not like to waste time dealing with debts they have deemed uncollectible. If they cannot sue them, they are going to sell them. Filed bankruptcy? Disputed the debt several times? Identity theft? Not their problem, say the back-end collectors. Often, they will NOT close out your file, and will just sell it. The new agency has no idea what kind of accounts are in the portfolio they are buying. They don't pick and choose. So, it really is a surprise to them when you say that your identity was stolen eight years ago. So, one has to go through the disputing process over, and over, and over. (This is changing though, as consumer attorneys are jumping all over agencies that sell debt that they shouldn't. These types of lawsuits can involve several firms, and involve a big payoff.)

My last point about junk-debt buyers: they are aggressive. They want their money. Their investors want returns. IF THEY CAN SUE YOU, THEY WILL. Normally, there is a legal department working within the agency. They are given a percentage of the accounts to work, just as the other collectors are. It's the luck of the draw. If the account is suit worthy, and the legal department has it, they will attempt to sue you. I know this isn't going to be popular, but I am going to state the facts as they are. If you call attention to yourself, and the account is in-stat, you are risking being sued. What do you mean? I mean that if you file a debt validation claim, cease & desist, refusal to pay, etc...you have just called attention to yourself. These accounts are given to a special department. Yes, they will usually try to collect from you. It costs money to sue, but if all else fails...they will attempt to sue you. (I want to note that if you ever have any question about a debt, do not let them scare you out of your rights. You have a right to know what the debt is, who the company is, and you certainly have the right to not be contacted at work.)

>>>How can they sue me? They are in Maine. I am in California. This is an easy one to answer. The agency I worked for had law firms in every state, except North Dakota and Wisconsin. The law firm in and of itself if NOT the collection agency, but is the REPRESENTING LAWYER of the plaintiff...JunkDebtA. Is it worth it to them? Depends on the firm. I got sued by a junk debt buyer for $500 dollars. It probably cost them more money to sue me than they will ever get from me. I am non-chalant about it because I live in a non-garnishable state, and I don't own property. It is on my credit, somewhere among years of medical bills.

Let me put it this way: The company I worked for had a motto. It was "Get our name out there, and get on the map." They actively sue debtors and attempt to collect on debt so they are being made known in the industry. All of the agencies feel the same way.

Those are really the basics. I could go into a lot more detail, but there is a lot to go into. So, this leads me to...a summary.

*Junk-debt buyers, contrary to belief, are not third party collectors. They assume all rights of the original creditor upon sale.

*Junk debt firms must respect your rights, and remain FDCPA compliant. Not to do so would be skating on very thin ice.

*Junk debt firms can present a big headache for you if you are disputing a debt that you do not owe. Keep all of your paperwork...for a very long time. It is not uncommon for the debt to show up again several years later.

*Junk-debt buying is a booming business. They will not be going away anytime soon. I do expect that as time goes by, more laws will be passed that are specific to them.

*They will sue you if they deem you suit worthy. It is a part of the aggressiveness of the industry.

Please feel free to ask me any questions here in the forum relating to this topic, so I can share with everyone.

I am going to leave you with a *did you know...?*

Did you know that settling a debt earns you a tax penalty? Forgiven debt is considered earned income. Any portion of the debt forgiven is taxable. Agencies are going to be sending out forms on the debt for you to file with your taxes. You should know that the industry is fighting this law tooth and nail. As the law stands right now, they don't have to tell you that you just got penalized. The government is seeking to change that, and I expect they will win out! Good news for us, right!

Dont
pay them crap....I don't care if the debt is yours or not, I just had a
motion for summary judgment denied today for the plaintiff.....one for
19k and other for 16k, and yes I was nervous because it's my very first
time and I was pro se on this matter, make them prove it, i decided if
Im going to pay I will make them work for it, during the discovery
process I requested copies of the agreement and last 12 months of the
statement showing how they came up with the amoun......never got
it...l.right there I knew they had nothing.....got a motion for summary
judgement and date for court later on so I file my motion to
strike......cause they claim some clown know the account first hand blah
blah blah..what ever....anyway when I got there this morning the
attorney pull me aside and you guys know, try to get me to settle...so I
told him no...he then started to ask me question about the
account...that raise flags for me...I already had two different angles
to fight my case depending what he said to the judge....so I told him
everything he need to know, because I knew he was going to used it
against me...I set his a$$ up from the get go....he was fishing.....I
really had intention to pay it cause I got cold feet at the beginning of
the month, so I said let me pull my credit so I can settle on what was
the charge off balance....I told myself I will plead with judge so maybe
he can minupulate the plaintiff attorney for taking a smaller
amount....I pull my credit with the 3 credit agencies and guess
what...it was never reported to my credit....BOOM...LMAO.....anyway the
judge ask them to state their case ans as I figured he used every word I
told him against me...when he was done the judge ask me what do I have
to say about it....I told him your honor I'm not denying I ever had an
amex account but I thought it was paid off so I'm disputing the amount,
my ex wife and myself had an Amex card but it was never my
account...here's my credit report...see I never had an Amex
account....he accepted it into evidence and he ask their attorney do you
guys have any agreement showing proof he own this account....because he
has nothing on his credit report stating he ever had an Amex
account...they said no....that was it..you guys have the wrong
person.....it lasted 20 minuted max......I'm not paying any jdb crap I
don't care if I own the debt or not, because I think their tactic are
very harsh and aggressive....they are trying to get over....so why
shouldn't we...it's a lucrative business for them and they play with
people health..I had stress for an entire year going back and forth with
these clowns....they was trying to extort thousand of dollars from
me...and believe me I can pay it....so I can imagine what some of you
are going through when you really can't afford to pay it....don't let
them make you feel bad and embarrass you can't pay your debt....the
credit card company is not in business to lose money, you paid for your
debt three times already with all the interest you paid....they stress
you and they don't care..it's not their problem....so if you can get
over..get over..they paid 421.00 dollars for my debt, I know cause I
petition them for ownership of the debt...they tried to marked it off
with a black marker....I still could of read it...fools....and they want
over 30k from me...ha....yea right...I was ready to fight it to the
end...I saw an oppertunity so I took it....believe me I can still sleep
at night knowing I didn't pay that bill...anyway ppl make them prove
their case, don't make it easy for them....their lawyer told me from the
get go he knew I had no intention of paying the debt...and I said you
shouldn't assume anything...because maybe I was going
to....:mrgreen:

Unregistered

Sub: #2 You are right, chargeoff an writeoff are 2 different things. ChaTue, 04/26/2011 - 09:55

You
are right, chargeoff an writeoff are 2 different things. Chargeoff
happens when a company doesn't believe, or are required by law, that
they are able to bring account current within a time frame. By law the
time frame for chargeoff is max 180 days on CC debt at least. Once the
clicks, the account is taking from current recievables and transferred
to current collections. Depending on the basis of accounting, in accrual
taxes are paid that period, in cash taxes aren't paid until closed. If
the account isn't collected, the loss goes in for the period the account
is sold. When a debt buyer purchases the account, they are purchasing a
recievable. What that means, is they are expecting to collect 100%,
similar to buying a bond that should pay you at maturity twice what you
spent. So if no payment is received it is in fact a loss for you, and
losses are free to be claimed on taxes. Writeoff happens when you
dismiss the debt as fully uncollectable, that's where 1099c comes in.
From what I know you can't sell past 1099c.

I
think a charge off or write off is different from a tax write off. A
tax write off requires the company to file a 1099-c and the consumer
would have been made aware of that at tax time. Once they do this, the
debt is considered forgiven (you had to pay taxes on it as in come).

Charged off or written off as it pertains to credit reports I think is
just internal bookkeeping. They have just decided the amount was a
total loss. These accounts get bundled together and either go to in
house collections, outsourced collections, a lawyer, or sold off with
the older the accounts, the cheaper it gets.

Unregistered

Sub: #4 Doesn't it seem illegal for a company to sell a debt they've wriSat, 04/09/2011 - 13:32

Doesn't it seem illegal for a company to sell a debt
they've written off? If I understand correctly, when you write off the
loss you avoid paying taxes of that amount. So, I could write off the
$10,000 that is owed to my medium sized business on a number of
delinquent accounts and use that $10,000 as a deduction on my taxes.
THEN, I could sell that debt to others? Isn't that wrong? Doesn't that
seem like a tax scheme? This means the government is not only footing
the bill for the debt by way of tax deduction, but when the next company
can't collect they can write it off, too? ... even though they're going
to sell it again?

Unregistered

Sub: #5 my question is, if the original account is over seven years old Wed, 10/13/2010 - 21:07

my
question is, if the original account is over seven years old and closed,
how can they just bring it back up, sue me, and put it on my credit as a
judgement against me? I even recieved court papers saying the case was
dismissed due to lack of evidence,yet it is still on my report as a
judgement. I just disputed it so im waiting to see how that plays out.
any thoughts?

I
think Im in the wrong business....Collection Agy. are a rip off......
The people that work for them must be really despreate, to have to work
for these kind of people you need money really bad are they are just
like the owners of the company they work for....
I heard that people that do not live in the US are people who run down
money like if it was taking candy from a baby........ "That is
sick"

[One
thing you forgot to mention is that credit card debt is
non-transferable. According to the UCC any kind of a revolving account
is non-transferable, therefore you must always respond to the debt buyer
dunning letter. A good simple letter may look like this:

June 13, 2001

Your Name
123 Your Street Address
Your City, ST 01234

ABC Collections
123 NotOnYourLife Ave
Chicago, IL

Date

Re: Acct # XXXX-XXXX-XXXX-XXXX

To Whom It May Concern:

This letter is being sent to you in response to a notice sent to me on
September 30, 2002). Be advised that this is not a refusal to pay, but a
notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC
1692g Sec. 809 (b) that your claim is disputed and validation is
requested.

This is NOT a request for ???verification??? or proof of my mailing
address, but a request for VALIDATION made pursuant to the above named
Title and Section. I respectfully request that your offices provide me
with competent evidence that I have any legal obligation to pay you.

Please provide me with the following:

??? What the money you say I owe is for;
??? Explain and show me how you calculated what you say I owe;
??? Provide me with copies of any papers that show I agreed to pay what
you say I owe;
??? Provide a verification or copy of any judgment if applicable;
??? Identify the original creditor;
??? Prove the Statute of Limitations has not expired on this account
??? Show me that you are licensed to collect in my state
??? Provide me with your license numbers and Registered Agent

At this time I will also inform you that if your offices have reported
invalidated information to any of the 3 major Credit Bureau???s
(Equifax, Experian or TransUnion) this action might constitute fraud
under both Federal and State Laws. Due to this fact, if any negative
mark is found on any of my credit reports by your company or the company
that you represent I will not hesitate in bringing legal action against
you for the following:

??? Violation of the Fair Credit Reporting Act
??? Violation of the Fair Debt Collection Practices Act
??? Defamation of Character
??? If your offices are able to provide the proper documentation as
requested in the following Declaration, I will require at least 30 days
to investigate this information and during such time all collection
activity must cease and desist.

Also during this validation period, if any action is taken which could
be considered detrimental to any of my credit reports, I will consult
with my legal counsel for suit. This includes any listing any
information to a credit reporting repository that could be inaccurate or
invalidated or verifying an account as accurate when in fact there is no
provided proof that it is.

If your offices fail to respond to this validation request within 30
days from the date of your receipt, all references to this account must
be deleted and completely removed from my credit file and a copy of such
deletion request shall be sent to me immediately.

I would also like to request, in writing, that no telephone contact be
made by your offices to my home or to my place of employment. If your
offices attempt telephone communication with me, including but not
limited to computer generated calls and calls or correspondence sent to
or with any third parties, it will be considered harassment and I will
have no choice but to file suit. All future communications with me MUST
be done in writing and sent to the address noted in this letter by USPS.

It would be advisable that you assure that your records are in order
before I am forced to take legal action. This is an attempt to correct
your records, any information obtained shall be used for that
purpose.

Best Regards,

Your Signature
Your Name

Remember that if you are sued they are almost always suing on the amount
they claim you owe as they have no proof of anything, you just have to
agree and you have entered into a new contract with someone who does not
have the legal right to collect.

Always make them prove their case. Read the federal rules of Evidence
and your state rules of Evidence.

Sorry,
but the junk debt buyer purchased this debt at its own risk. The debtor
was already punished for not paying the debt when the debt was reported
to the three major credit bureaus. The debtor owes the junk debt buyer
absolutely NOTHING unless the debtor fails to dispute the validity of
the debt or foolishly AGREES to pay the junk debt buyer. Oh. By the way,
a junk debt buyer IS a third party.

good stuff,but let's not forget alot of JDB'S buy debt that is past
SOL.if the person knows this then the JDB is SOL.

giving hope to the hopeless,help to the helpless,and hap to the hapless.

Unregistered

Sub: #9 [QUOTE=Anonymous;99073]You make it sound like people shouldn't bWed, 04/21/2010 - 05:04

[QUOTE=Anonymous;99073]You make it sound like people
shouldn't be liable to pay off their debt. Essentially, wouldn't that
be theft? Is it OK for people to steal? You say THEM, like collectors
are really the free loading criminals in this situation. Deleted for name calling!
Frogpatch![/QUOTE]

Sorry, but the junk debt buyer purchased this debt at its own risk. The
debtor was already punished for not paying the debt when the debt was
reported to the three major credit bureaus. The debtor owes the junk
debt buyer absolutely NOTHING unless the debtor fails to dispute the
validity of the debt or foolishly AGREES to pay the junk debt buyer. Oh.
By the way, a junk debt buyer IS a third party.

By signing up for counseling session, your provided details (Name, Email ID and Phone No.) will be forwarded to the company advertising on the DebtCC. However, you have no obligation to use their services.

Some creditors and collection agencies refuse to lower the pay off amount, interest rate, and fees owed by the consumer.

Creditors/collection agencies can make collection calls and file lawsuits against the consumers represented by the debt relief companies.

Debt relief services may have a negative impact on the consumer's creditworthiness and his overall debt amount may increase due to the accumulation of extra fees.

The amount which the consumer saves with the use of debt relief services can be regarded as taxable income.